AEC 502 SUMMARY

LAND RESOURCE ECONOMICS

PROF OLADEEBO

SCOPE OF LAND ECONOMICS

Land resource economics may be described simply as the field of study that deals with
man's economic relationship with others with respect to land. It is concerned with the allocation
and use of scarce resources.
Land resource economics is often characterized by its practical, institutional and problem
solving approach. It uses concepts and working tools from many and varied disciplines such as
Law, Political Science, Geography, Psychology, Sociology, Architecture, Estate management
etc. (Take note)
Basic Concepts in Land Resource Economics
The four basic Concepts are:
1. The economic concept of land and land resources
2. The classification of land uses by type
3. The concept of land use capacity
4. The concept of highest and best use

ECONOMIC CONCEPT OF LAND

 Land in its most accepted use refers to solid portions of the earth but it may also apply to
nations, people or a political division.
 From a legal view, land (or real estate) may be considered as any portion of the surface of
the earth over which ownership rights are exercised.
 Economists regard land as the sum total of natural and manmade resources over which
the possession of the earth surface gives control.

CLASSIFICATION OF LAND USES BY TYPE

They are in ten folds
1. Residential land
2. Commercial and industrial site

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 3. Crop land
4. Pasture and grazing land
5. Forest land
6. Mineral land
7. Recreational land
8. Transportation land
9. Service areas e.g barracks, cemetery
10. Barren and waste land
Concepts of Land
Land means many things to many people depending upon the concept, interest at the
moment, the context in which it is used and the circumstances under which it is considered.
 Land as space: in this view, land is thought as room and surface with which and upon
which the life takes place. Land is fixed in quantity and indestructible because space
cannot be destroyed or increased.
 Land as a nature: in this sense, land is conditioned by its access to sunlight, rainfall,
wind, changing climatic conditions, soil and topographic conditions. Due to this, some
areas are rich in soil, forest and other resources while others are barren and bleak.
 Land as a factor of production: it is considered alongside other factors of production
(labour, capital, management). Land is seen as a nature-given source of food, minerals,
building materials, fibre and other raw materials used in modern societies. (Take note)
 Land as consumption good: land is often held and coveted because it adds value as a
consumer good on its own right.
 Land as situation: this involves location with respect to markets, geographic features,
other resources and other countries. It is significant because the value and use of most
land is likely determined by its location and accessibility, strategic importance of location
factor in modern economic affairs and world politics. E.g Comparing a Land in Lekki,
Lagos State to a land in Odo-Oba, Oyo State. (Take note)
 Land as a property: it involves real estate and has legal connotations. It is concerned
with areas where rights of ownership are exercised and use with the nature of rights and
responsibilities held on land.

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  Land as a capital: in this concept, from the standpoint of the investor, land must be
purchased or leased like other capital goods.

DEMAND FOR LAND

Demand for land is a derived demand. The demand for land is influenced by technological
developments, custom and tradition, individual tastes and personal goals and by the changing
attitudes that come with advancing age. The basic factors affecting the demand for land is that of
population numbers.
Demand for Agricultural Lands
1. Population numbers
2. Nutritional and consumption standards
3. Land productivity

SUPPLY OF LAND
 Physical supply: is concerned with the existence of land resources i.e physical land must
be available.
 Economic supply: is concerned only with the portion of physical supply that man uses. It
is greatly affected by price and demand factors.
Factors Affecting Economic Supply of Land
 Natural Physical Characteristics: this relates with sunlight and temperature,
precipitation and access to water supply, topography and drainage, soil conditions and
presence of minerals, physical locations (markets and transportation).
 Economic Factors: it becomes economically significant whenever people begin to use
land, compete with others for use/control, put a price or value on land or assume the cost
associated with their development.
 Institutional Determinants of Land Use: the factors involved are culture and custom,
government law, public opinion, and concept of property right. (Take Note)
Culture: in the Yoruba setting, every male child has right to be given land unlike in
Ghana where it is female.
Government law: Government is the owner of the land

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 Public opinion: stimulates interest in environmental quality and public acquisition of
recreation areas.
Property rights: you cannot improve a land if you do not have the right over it as the
owner.
 Technological Factors: they affect by pointing the way to the fuller and more extended
use of existing supplies and by facilitating the discovery development of new source of
supply.

DR AKINNIRAN
PROPERTY RIGHTS IN LAND RESOURCES
 Property rights tend to influence incentives and the behaviours
 Property right assignments affect the allocation of resources, composition of output and
distribution of income
 Property right differs from free goods in the sense that it involves only appropriate
objects of value over which man can and does exert possession
 Property right until there is both an owner to possess and use the property object in
question and other interested persons who can be excluded from possession and use
 Property right come into existence only when two or more people compete for the
possession and use of some objects and need develops for the allocation of rights between
them.
 Property does not exist when there is no population and no outside claimants.
Two of the most important attributes of property objectives are:
a. Appropriability
b. Value

SOCIAL CONTROL OVER LANDED PROPERTY

Society has inherent interest in all arrangements involving the ownership and use of landed
property. They exist because of:
 The original role society plays in granting, recognizing and protecting property rights
 The economic and social significance of property in daily life

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  Overall responsibility society has for maximizing social returns both now and in the
future
Properties are always subject to social control and some of these are informal in form of
customs, traditions, religions, restraints and public opinion.

FORMAL CONTROLS: are in form of sovereign power which interprets and implement the
will of society.
Five Important Formal Powers exercised by Government
1. Police power
2. Eminent domain (Powers of control over landed property)
3. Taxation power

4. Spending power
5. Proprietary power (Auxiliary powers to achieve particular objective)

Police Power: is the power of government to limit personal liberties and personal rights in the
interest of public health, safety, morals and general welfare.
Eminent Domain: enables government to appropriate private properties for public uses without
the owner’s consent as long as long as the property is taken under due law process with just
payment of just compensation.
Taxation: most taxes are levied to collect revenue. It can be used to force the redistribution of

property holdings. Exceptions can be used to favour particular classes of owners.

DR EZEKIEL
LAND TENURE SYSTEM
Land tenure is a concept which involves many relationships established among men that
determines either varying rights to control, occupy and use landed properties. It concerns all of
the ways in which people, corporate bodies and government share in the bundle of rights and it
concerns the time period during which these rights are held.

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Tenure: means the holding of property especially real estate or by reference to a superior
inherent in the world ‘held’ is the idea of exclusion that is to set aside and keep as one’s own by
shifting out and excluding others.
 In the North, the law has been codified into a book called 1962 land tenure law.
 In the south a customary land tenure system is used where individual is given land by the
head of the community e.g Chief, Oba, etc. The implication of this is that land will be
redistributed and you will not be allowed to alienate the land from the community.
 In the East, they have Compound land/farm, Near and Far Farm. Compound land is not
redistributed. Near and far farms are periodically shared among members and no member
is allowed to grow permanent crops on the land as it also shared according to seniority.
The implication of this is that if land is shared and there's rotation, it may take 15 years
before it return the land originally to be given you initially.
Problems Arising From Customary Land Tenure Systems
 Problem of Tenants: the tenants do not have secure access to land that is they have no
security of expectation.
 Inalienability or refusal to sell: family land is not subject to sale. The reason is that
there is multiplicity of interest on a piece of land. The law says that the sale of land by
individual member without family members consent is void.
 Fragmentation of land into uneconomic sized tracts: this is due to the rule of
inheritance which says every male must share from the land.
Land Reform: is a means of bringing about structural change in the agricultural sectors there by
altering the size distribution of holdings or distribution of income.
Forms/Types of Land Reforms
i. Redistribution of public or private land in other to change the pattern of land distribution
and size of holdings
ii. Consolidation of individual holdings
iii. Changes in land ownership and tenancy right with or without physical redistributing of
land
iv. Change in condition of tenure without changing ownership or redistributing land tenancy
reform

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LAND USE DECREE NO.6, 1978
 It was promulgated in March, 1978 and its purpose was to socialize land ownership
 It divides the country into rural and urban areas
 Urban areas is controlled by the Governor and Rural areas is controlled by the Local
Government

Land Use and allocation in Urban and Rural Areas according to land use Decree no. 6 of ,
1978
Urban Areas Rural Areas
Statutory certificate of occupancy Customary certificate of occupancy
Land use and allocation committee advices the Land use advisory committee advices Local
Governor Government Chairman
Governor can allocate a limit of 2000ha to a Local Government can grant a maximum of
person. 500ha for agricultural use
Each individual can keep half an hectare of Using the land for agricultural purpose doesn't
undeveloped land need application for customary certificate
except using the land as collateral and you
apply for certificate of occupancy

LAND USE ACT

The purposes of the act are to:
i. Make agricultural investment attractive by removing land control uncertainty
ii. Curb speculation in urban lands
iii. Make opportunities to occupy land generally available to all Nigerians
iv. Reallocate rural land to large scale farmers to facilitate large scale farming
Problems of Land Use Act
1. There is no unambiguous definition of what constitutes improvements or unexhausted
improvements
2. The method of accessing compensation for building farm structures is open market value
3. Finding a replacement for acquired agricultural land is extremely difficult

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 4. The payment of compensation has always been untimely
5. Shortage of funds is another major problem as there is a general problem of cash flow in
the economy.
Von Thunen's Model of Spatial Location
This model is concerned primarily to the role that transportation costs play in allocating
the land resources found at varying distance from market between different agricultural uses.
The Assumptions of the model are:
1. Rational behaviour
2. Isolated State
3. Uniformity fertility and climate
4. A village type of settlement
5. Uniform topography
6. Relatively primitive transportation facilities.

Conservation of Land
This means the preservation in unimpaired efficiency of the resources of the earth or in a
condition so nearly unimpaired as the nature of the case or wise exhaustion will permit. Land
resources conservation doesn't mean non uses it is concerned with the need for orderly and
efficient resource use.
Classification of Land Resources
 Fund or stock resource
 Flow resource
 Composite resources (has characteristics of fund and flow).
Conservation depends on
The expected benefits, duration of the planning period, quantum of investment, operators ability
to choose, impact on other resources.
Measures to promote conservation
Enforced conservation: by zoning and conservation district (irrigation, flood, wind and water
control)
Conservation education: Education on problems, solutions and opportunities, and to create
conservation habit.

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Economic measures: loan at reduced rate, subsidies, lease provision on long term basis.

MR ADELALU
LAND RENT AS ECONOMIC SURPLUS

MVP

L
AVC
Cost & Return

MFC=AFC
S

Economic Surplus of Land Resources (point where MFC=AFC)

Variable Inputs

MR=AR
L

M
Cost &
Return

Input and Output

MC MC
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 Cost &
Land Rent Land Rent AC

Return
Cost &
Return

AC
Production cost

Production cost

Unit of output Unit of output

Grade A Land Grade B Land

Land Rent
MC

AC
Cost &
Return

Production cost

Unit of output
Grade C Land

Land Quality Factors

There are many factors which determine the land quality
1. Level of capital improvement in particular
2. Type of land
3. Property improvement practices
4. Access to water supply
5. Closeness to education
6. Pleasant view of the land in question
7. Desirable neighbourhood
8. Convenience of access of the particular type of land
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The Concept of Land Use Capacity

Increasing cost per unit of product

Price and Cost Per Unit of Output

Land

Rent

Cost of
Production

Decreasing use capacity

Land Rent

No net margin

Decreasing use capacity

The ability of a land to yield highest possible return to the owner is called Land Use Capacity.
Places with highest use capacity have the highest values, production and land rent.

Various Views Concerning Land Rent

i. Land rent as an unearned element
ii. Rent as a return on investment

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Significance of Land Rent
i. Its relationship to contract rental arrangements
ii. To property values
iii. To land resource investments and development decision
iv. To the allocation of land resources between different types of uses

IRRIGATION
Irrigation can be defined as a practical application of water on a given area of land. It is
also the application of water to a specific area of land to supplement insufficient rainfall.

History of Irrigation: modern artificial irrigation began on a large scale in the 18th century by
the pioneer work of British engineers in India. Year 1800-1852 was considered the golden age of
irrigation when the work of Sir Col. Cotton and Col. Author was noticeable and traceable to the
irrigation work in India. Statistics show that the area irrigated in the world rode from 1800sqkm
in 1901 to 1856sqkm in the year 1954.

Prospect of Irrigation
 Improved agricultural production
 Agro-based and allied industries to process increased output
 Employment opportunities
 Availability of water based recreational facilities
 The prestige associated may reverse the flow of rural-urban irrigation
Problems of Irrigation
Physical, Environmental, Technical, Economic, Social, Institutional and Legal problems.

Methods of Irrigation
 Surface Irrigation: includes flood, basin, corrugation,
 Overhead Irrigation: includes sprinkler, drip

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Scope of Irrigation (Available resources)
Human resources: Nigeria has an estimated population of about 200 million which grows at the
rate of 2.5% per annum.
Land Resources: Land of Nigeria is 91.07 million hectares, 72.5% is arable, 1.4 million is
irrigable and 0.05% of irrigable land is under irrigation.
Water Resources: Surface water (rivers, stream etc) = 193 billion cubic metres of water. Niger
and Benue at Lokoja have 157 million m³, Lake Chad has 33 million while domestic needs of
water only amounts to 4.8 billion m³ per year.
Studies Needed
 Need to control health hazards associated with irrigation
 Need to construct canal system by the federal government of Nigeria to aid practical
irrigation
 Need to train and retrain wall personnel involved in the process of irrigation
 Need to find or provide solution for the problem of erosion associated to irrigation
process
 Need by federal ministry of agriculture to provide necessary fund to finance for practical
irrigation system

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